### What type of mortgage loan to choose? --> 2 simple rules

#### First basic rule: the less you borrow, the cheaper.

The extent of your own contribution is being expressed with the term ** "Loan-to-Value Percentage (LTV)"**:

* this is the relationship, in percentage, between the requested loan amount and the appraised value of the property.*

For example:
- LTV of 50%:
- You finance half of the purchase price and all attorneys' fees (notary costs)
- LTV of 80%:
- You finance 20% of the purchase price and all attorneys' fees
- LTV of 100%:
- You only finance the attorneys' fees
- LTV of 120%:
- You don't want to finance anything. This is possible with our Habitat Plus® Mortgage Loan.

#### Second basic rule: the more variable the formula, the cheaper the interest rate.

The **flexibility** of your loan is being expressed with the term **"Variability"**:

*this is the number of years it takes before your interest rate can be adjusted to the, at that moment, present market conditions*

For example:
- 1-1-1:
- this rate can be adjusted every year at the (at that moment) present market conditions
- 3-3-3:
- your rate will be adjusted to the market conditions every 3 years
- 5-5-5:
- your rate will be adjusted every five years
- 10-5-5:
- your rate can be adjusted after ten years the first time and afterwards every 5 years. This is what we call a
*semi-fix * interest rate.
- Fixed-rate:
- your rate is fixed and therefore unchangeable during the whole duration of your loan.

#### Fixed-rate or annual adjustable-rate mortgage loans (ARM)?

... **fixed-rate**! They all cry out immediately. We **don't fully agree this statement**.

Often we can offer you a 1-1-1 or even a 3-3-3 within a formula interest rate cap 2%** and** without a downward limitation.

In other words, the interest rate of such a mortgage loan can increase with a maximum of 2% **with regard to the initial interest rate**.

So this formula is, even in a worst-case scenario, hardly more expensive than the fixed-rate loan of for example 20 years.

Moreover we also noticed that interest rates hardly changed over the last 5 years, and on the contrary even decreased a little.

We also noticed that financial institutions are not free to change the interest rate but have to follow a certain mechanism, laid down by the law.
The adaptation of such interest rates is joint to the linear debentures of the state at 1 or 3 years (the so-called index).
It is very simple: if the index falls with one percent, your interest rate will do the same and vice versa.

In brief, it is certainly worth while to weigh the pros and cons but a fixed-rate mortgage loan is, given the present historical low interest rates, certainly an excellent choice.